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Facts & Findings

Resilience and Stability in the banking and fincancial system?

by Bodo Herzog

The situation is serious: The corona crisis challenges the financial and banking system.
What is the situation and what do we do now?

Weak profitability, unresolved regulatory challenges and increasing competition in the digital sector pose further challenges for banks. Due to the finiancial crisis 2008/2009 the financial system is now more resilient and better able to sustain the financing of the real economy. However, further improvements in financial stability, such as increased capital requirements, regulation of shadow banks or reforms in financial supervision, are needed. Our facts & findings illustrates the difficult situation and shows recommendations which necessarily should be introduced.

Since the global financial crisis of 2008/2009, there has been no challenge to the financial and banking system comparable to that during the Corona crisis.

Weak profitability, unresolved regulatory challenges and increasing competition in the digital sector pose further challenges for banks.

The stability of the financial system and access to financial markets was not at risk during the pandemic. Through joint efforts and better bank capitalisation, the financial system is now more resilient than during the financial crisis.

Provided that grants and loans in the “next generation EU” fund are well targeted for structural reforms and investments in the future, this should boost confidence and growth.

However, further improvements in financial stability, such as increased capital requirements, regulation of shadow banks or reforms in financial supervision, are needed.

You can read the full report as a PDF here.

About this series

This serial informs and merges major issues of current topics the Konrad-Adenauer-Stiftung is dealing with.

The editions present:

  • Results and recommendations
  • Offer short analysis
  • Illustrate future plans and
  • List contacts within the Konrad-Adenauer-Stiftung

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